A board on the floor of the New York Stock Exchange shows the Standard & Poor's numbers, The U.S. government has filed civil charges against Standard & Poor's Ratings Services for improperly giving high ratings to toxic mortgage bonds before the financial crisis.Associated Press photo

Did deliberate deception by Standard & Poor's contribute to the Great American Recession? Yes, according to a $5-billion lawsuit filed by the federal government.

The United States Justice Department has accused S&P of knowingly inflating its ratings on the sort of risky mortgage investments that helped to trigger the crisis.

But there is more at stake in the overdue civil suit than an effort to recover money. It points to huge conflicts of interest on Wall Street and the basic need for reform.

Getting top marks from the three big credit-rating agencies — S&P, Moody's and Fitch — makes it possible for banks to sell trillions of dollars in investments. This high-priced financial analysis by experts is supposed to be impartial and investors have always been led to believe it is.

According to the suit, however, they were duped. It charges that Standard and Poor's gave high ratings to shaky investments because it wanted to cash in on more business from the banks that issued them.

Attorney General Eric Holder called the case "an important step forward in our ongoing efforts to investigate and punish the conduct that is believed to have contributed to the worst economic crisis in recent history."

The civil action could serve as a prototype in the effort to consider ways to amend the credit-rating process.

Two years ago, the federal Financial Crisis Inquiry Commission said the 2007 collapse on Wall Street followed "pervasive permissiveness" by regulators, and high-risk behavior by home buyers and owners, mortgage lenders, investors and financial institutions. According to the report, the three ratings agencies — which got paid from $250,000 to $500,000 to grade each collateralized debt obligation — "were essential cogs in the wheel of financial destruction."

As the housing boom ended when borrowers could not keep up with mortgage payments, thousands of AAA-rated securities based on those debt obligations collapsed as well.

For its part, S&P, a unit of New York-based McGraw-Hill, called the lawsuit meritless and said, "Claims that we deliberately kept ratings high when we knew they should be lower are simply not true."

But the federal complaint includes a wealth of embarrassing e-mails and other evidence that S&P analysts had recognized the financial problems early.

Standard & Poor's says other agencies also gave the same high ratings and that the federal government itself failed to predict the subprime mortgage crisis.

Mr. Holder said the lawsuit, which is the result of a probe that began in 2009, has nothing to do with S&P's decision in 2011 to drop by a notch its rating on long-term U.S. debt. The downgrade came amid the dispute between the White House and Congress over borrowing.

Lack of oversight by the government did play a central role in the 2008 financial collapse. But high credit ratings on certainly toxic mortgages inflated the housing bubble.

It remains for Congress to find a way to make sure once and for all that credit on Wall Street and elsewhere is rated objectively — based on fact, not fiction.